SECOND DIVISION In a Letter dated July 23, 1982, Padolina informed Hector Navasero, the

President of PHILAB, to proceed with the fabrication of the laboratory

G.R. No. 152411             September 29, 2004 furniture, per the directive of FEMF Executive Assistant Lirio. Padolina
also requested for copies of the shop drawings and a sample contract 5 for
UNIVERSITY OF THE PHILIPPINES, petitioner,  the project, and that such contract and drawings had to be finalized
vs. before the down payment could be remitted to the PHILAB the following
PHILAB INDUSTRIES, INC., respondent. week. However, PHILAB failed to forward any sample contract.

DECISION
Subsequently, PHILAB made partial deliveries of office and laboratory
furniture to BIOTECH after having been duly inspected by their
CALLEJO, SR., J.: representatives and FEMF Executive Assistant Lirio. 

Before the Court is a petition for review on certiorari of the Decision 1 of
the Court of Appeals in CA-G.R. CV No. 44209, as well as its
Resolution2 denying the petitioner’s motion for the reconsideration
thereof. Themo1 mo2 Court of Appeals set aside the Decision 3 of Branch 150
of the Regional Trial Court (RTC) of Makati City, which dismissed the
complaint of the respondent against the petitioner for sum of money and
damages.
On August 24, 1982, FEMF remitted ₱600,000 to PHILAB as
downpayment for the laboratory furniture for the BIOTECH project, for
which PHILAB issued Official Receipt No. 253 to FEMF. On October 22,
1982, FEMF made another partial payment of ₱800,000 to PHILAB, for
which the latter issued Official Receipt No. 256 to FEMF. The remittances
were in the form of checks drawn by FEMF and delivered to PHILAB,
through Padolina.

The Facts of the Case
Sometime in 1979, the University of the Philippines (UP) decided to
construct an integrated system of research organization known as the
Research Complex. As part of the project, laboratory equipment and
furniture were purchased for the National Institute of Biotechnology and
Applied Microbiology (BIOTECH) at the UP Los Bañ os. Providentially, the
Ferdinand E. Marcos Foundation (FEMF) came forward and agreed to
fund the acquisition of the laboratory furniture, including the fabrication
thereof.
Renato E. Lirio, the Executive Assistant of the FEMF, gave the go-signal to
BIOTECH to contact a corporation to accomplish the project. On July 23,
1982, Dr. William Padolina, the Executive Deputy Director of BIOTECH,
arranged for Philippine Laboratory Industries, Inc. (PHILAB), to fabricate
the laboratory furniture and deliver the same to BIOTECH for the
BIOTECH Building Project, for the account of the FEMF. Lirio directed
Padolina to give the go-signal to PHILAB to proceed with the fabrication
of the laboratory furniture, and requested Padolina to forward the
contract of the project to FEMF for its approval.
On July 13, 1982, Padolina wrote Lirio and requested for the issuance of
the purchase order and downpayment for the office and laboratory
furniture for the project, thus:
1 Supply and Installation of Laboratory
. furniture for the BIOTECH Building
Project
Amount : P2,934,068.90
Supplier : Philippine
Laboratory
Furniture Co.,
College, Laguna
On October 16, 1982, UP, through Emil Q. Javier, the Chancellor of UP Los
Bañ os and FEMF, represented by its Executive Officer, Rolando Gapud,
executed a Memorandum of Agreement (MOA) in which FEMF agreed to
grant financial support and donate sums of money to UP for the
construction of buildings, installation of laboratory and other
capitalization for the project, not to exceed ₱29,000,000.00. The
obligations of FEMF under the MOA are the following:
ARTICLE II
OBLIGATIONS OF THE FOUNDATION
2.1. The FOUNDATION, in carrying out its principal objectives
of promoting philantrophic and scientific projects through
financial support to such projects that will contribute to the
country’s economic development, shall grant such financial
support and donate such sums of money to the RESEARCH
COMPLEX as may be necessary for the construction of
buildings, installation of laboratories, setting up of offices and
physical plants and facilities and other capital investment of
the RESEARCH COMPLEX and/or any of its component
Research Institutes not to exceed ₱29 Million. For this purpose,
the FOUNDATION shall:
(a) Acquire and donate to the UNIVERSITY the site
for the RESEARCH COMPLEX; and
(b) Donate or cause to be donated to the
UNIVERSITY the sum of TWENTY-NINE MILLION
PESOS (₱29,000,000.00) for the construction of the
buildings of the National Institutes of Biotechnology
and Applied Microbiology (BIOTECH) and the
installation of their laboratories and their physical
plants and other facilities to enable them to
commence operations.

Attention : Mr. Hector C. 2.2. In addition, the FOUNDATION shall, subject to the approval
Navasero of the Board of Trustees of the FOUNDATION, continue to
President support the activities of the RESEARCH COMPLEX by way of
recurrent additional grants and donations for specific research
Downpayment 40% or and development projects which may be mutually agreed upon
:
₱1,173,627.56 and, from time to time, additional grants and donations of such
amounts as may be necessary to provide the RESEARCH
2 Fabrication and Supply of office COMPLEX and/or any of its Research Institutes with
. furniture for the BIOTECH Building operational flexibility especially with regard to incentives to
Project staff purchase of equipment/facilities, travel abroad,
recruitment of local and expatriate staff and such other
Amount : P573,375.00 activities and inputs which are difficult to obtain under usual
government rules and regulations.6
Supplier : Trans-Oriental
Woodworks, Inc.
The Board of Regents of the UP approved the MOA on November 25,
1st Avenue,
1982.7
Bagumbayan
Tanyag, Taguig,
Metro Manila In the meantime, Navasero promised to submit the contract for the
installation of laboratory furniture to BIOTECH, by January 12, 1983.
Downpayment : 50% or However, Navasero failed to do so. In a Letter dated February 1, 1983,
₱286,687.504 BIOTECH reminded Navasero of the need to submit the contract so that it
could be submitted to FEMF for its evaluation and approval. 8Instead of
submitting the said contract, PHILAB submitted to BIOTECH an
Padolina assured Lirio that the contract would be prepared as soon as accomplishment report on the project as of February 28, 1983, and
possible before the issuance of the purchase orders and the requested payment thereon.9 By May 1983, PHILAB had completed 78%
downpayment for the goods, and would be transmitted to the FEMF as of the project, amounting to ₱2,288,573.74 out of the total cost of
soon as possible. ₱2,934,068.90. The FEMF had already paid forty percent (40%) of the
total cost of the project. On May 12, 1983, Padolina wrote Lirio and
furnished him the progress billing from PHILAB. 10 On August 11, 1983,
the FEMF made another partial payment of ₱836,119.52 representing the
already delivered laboratory and office furniture after the requisite
inspection and verification thereof by representatives from the BIOTECH,
FEMF, and PHILAB. The payment was made in the form of a check, for
which PHILAB issued Official Receipt No. 202 to FEMF through Padolina. 11
On July 1, 1984, PHILAB submitted to BIOTECH Invoice No. 01643 in the
amount of ₱702,939.40 for the final payment of laboratory furniture.
Representatives from BIOTECH, PHILAB, and Lirio for the FEMF,
conducted a verification of the accomplishment of the work and
confirmed the same. BIOTECH forwarded the invoice to Lirio on
December 18, 1984 for its payment. 12 Lirio, in turn, forwarded the invoice
to Gapud, presumably sometime in the early part of 1985. However, the
FEMF failed to pay the bill. PHILAB reiterated its request for payment
through a letter on May 9, 1985. 13 BIOTECH again wrote Lirio on March
21, 1985, requesting the payment of PHILAB’s bill. 14It sent another letter
to Gapud, on November 22, 1985, again appealing for the payment of
PHILAB’s bill.15 In a Letter to BIOTECH dated December 5, 1985, PHILAB
requested payment of ₱702,939.40 plus interest thereon of
₱224,940.61.16 There was, however, no response from the FEMF. On
February 24, 1986, PHILAB wrote BIOTECH, appealing for the payment of
its bill even on installment basis.17
President Marcos was ousted from office during the February 1986 EDSA
Revolution. On March 26, 1986, Navasero wrote BIOTECH requesting for
its much-needed assistance for the payment of the balance already due
plus interest of ₱295,234.55 for its fabrication and supply of laboratory
furniture.18
On April 22, 1986, PHILAB wrote President Corazon C. Aquino asking her
help to secure the payment of the amount due from the FEMF. 19 The letter
was referred to then Budget Minister Alberto Romulo, who referred the
letter to then UP President Edgardo Angara on June 9, 1986. On
September 30, 1986, Raul P. de Guzman, the Chancellor of UP Los Bañ os,
wrote then Chairman of the Presidential Commission on Good
Government (PCGG) Jovito Salonga, submitting PHILAB’s claim to be
officially entered as "accounts payable" as soon as the assets of FEMF
were liquidated by the PCGG.20
In the meantime, the PCGG wrote UP requesting for a copy of the relevant
contract and the MOA for its perusal. 21
Chancellor De Guzman wrote Navasero requesting for a copy of the
contract executed between PHILAB and FEMF. In a Letter dated October
20, 1987, Navasero informed De Guzman that PHILAB and FEMF did not
execute any contract regarding the fabrication and delivery of laboratory
furniture to BIOTECH.
Exasperated, PHILAB filed a complaint for sum of money and damages
against UP. In the complaint, PHILAB prayed that it be paid the following:
(1) PESOS: SEVEN HUNDRED TWO THOUSAND NINE
HUNDRED THIRTY NINE & 40/100 (₱702,939.40) plus an
additional amount (as shall be determined during the hearing)
to cover the actual cost of money which at the time of
transaction the value of the peso was eleven to a dollar
(₱11.00:$1) and twenty seven (27%) percent interest on the
total amount from August 1982 until fully paid;
(2) PESOS: ONE HUNDRED THOUSAND (₱100,000.00)
exemplary damages;
(3) FIFTY THOUSAND [PESOS] (₱50,000.00) as and for
attorney’s fees; and
(4) Cost of suit.22
PHILAB alleged, inter alia, that:
3. Sometime in August 1982, defendant, through its officials,
particularly MR. WILLIAM PADOLINA, Director, asked plaintiff
to supply and install several laboratory furnitures and
equipment at BIOTECH, a research laboratory of herein
defendant located at its campus in College, Laguna, for a total
contract price of PESOS: TWO MILLION NINE HUNDRED
THIRTY-NINE THOUSAND FIFTY-EIGHT & 90/100
(₱2,939,058.90);
4. After the completion of the delivery and installation of said
laboratory furnitures and equipment at defendant’s BIOTECH
Laboratory, defendant paid three (3) times on installment
basis:
a) ₱600,000.00 as per Official Receipt No. 253 dated
August 24, 1982;
b) ₱800,000.00 as per Official Receipt No. 256 dated
October 22, 1982;
c) ₱836,119.52 as per Official Receipt No. 202 dated
August 11, 1983;
thus leaving a balance of PESOS: SEVEN HUNDRED TWO
THOUSAND NINE HUNDRED THIRTY-NINE & 40/100
(₱702,939.40).
5. That notwithstanding repeated demands for the past eight
years, defendant arrogantly and maliciously made plaintiff
believe that it was going to pay the balance aforestated, that
was why plaintiff’s President and General Manager himself,
HECTOR C. NAVASERO, personally went to and from UP Los
Bañ os to talk with defendant’s responsible officers in the hope
of expecting payment, when, in truth and in fact, defendant had
no intention to pay whatsoever right from the start on a
misplaced ground of technicalities. Some of plaintiff’s demand
letters since year 1983 up to the present are hereto attached as
Annexes A, B, C, D, E, F, G, and H hereof;
6. That by reason of defendant’s malicious, evil and
unnecessary misrepresentations that it was going to pay its
obligation and asking plaintiff so many red tapes and
requirements to submit, compliance of all of which took
plaintiff almost eight (8) years to finish, when, in truth and in
fact, defendant had no intention to pay, defendant should be
ordered to pay plaintiff no less than PESOS: ONE HUNDRED
THOUSAND (₱100,000.00) exemplary damages, so that other
government institutions may be warned that they must not
unjustly enrich themselves at the expense of the people they
serve.23
In its answer, UP denied liability and alleged that PHILAB had no cause of
action against it because it was merely the donee/beneficiary of the
laboratory furniture in the BIOTECH; and that the FEMF, which funded
the project, was liable to the PHILAB for the purchase price of the
laboratory furniture. UP specifically denied obliging itself to pay for the
laboratory furniture supplied by PHILAB.
After due proceedings, the trial court rendered judgment dismissing the
complaint without prejudice to PHILAB’s recourse against the FEMF. The
fallo of the decision reads:
WHEREFORE, this case is hereby DISMISSED for lack of merit
without prejudice to plaintiff's recourse to the assets of the
Marcos Foundation for the unpaid balance of ₱792,939.49.
SO ORDERED.24
Undaunted, PHILAB appealed to the Court of Appeals (CA) alleging that
the trial court erred in finding that:
1. the contract for the supply and installation of subject
laboratory furniture and equipment was between PHILAB and
the Marcos Foundation; and,
2. the Marcos Foundation, not the University of the Philippines,
is liable to pay the respondent the balance of the purchase
price.25
The CA reversed and set aside the decision of the RTC and held that there
was never a contract between FEMF and PHILAB. Consequently, PHILAB
could not be bound by the MOA between the FEMF and UP since it was
never a party thereto. The appellate court ruled that, although UP did not
bind itself to pay for the laboratory furniture; nevertheless, it is liable to
PHILAB under the maxim: "No one should unjustly enrich himself at the
expense of another."
The Present Petition
Upon the denial of its motion for reconsideration of the appellate court’s
decision, UP, now the petitioner, filed its petition for review contending
that: 
I. THE COURT OF APPEALS ERRED WHEN IT FAILED TO APPLY
THE LAW ON CONTRACTS BETWEEN PHILAB AND THE
MARCOS FOUNDATION.
II. THE COURT OF APPEALS ERRED IN APPLYING THE LEGAL
PRINCIPLE OF UNJUST ENRICHMENT WHEN IT HELD THAT
THE UNIVERSITY, AND NOT THE MARCOS FOUNDATION, IS
LIABLE TO PHILAB.26
Prefatorily, the doctrinal rule is that pure questions of facts may not be
the subject of appeal by certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, as this mode of appeal is generally restricted to questions of
law.27However, this rule is not absolute. The Court may review the factual
findings of the CA should they be contrary to those of the trial
court.28 Correspondingly, this Court may review findings of facts when the
judgment of the CA is premised on a misapprehension of facts. 29
On the first assigned error, the petitioner argues that the CA overlooked
the evidentiary effect and substance of the corresponding letters and
communications which support the statements of the witnesses showing
affirmatively that an implied contract of sale existed between PHILAB and
the FEMF. The petitioner furthermore asserts that no contract existed
between it and the respondent as it could not have entered into any
agreement without the requisite public bidding and a formal written
contract.
The respondent, on the other hand, submits that the CA did not err in not
applying the law on contracts between the respondent and the FEMF. It,
likewise, attests that it was never privy to the MOA entered into between
the petitioner and the FEMF. The respondent adds that what the FEMF
donated was a sum of money equivalent to ₱29,000,000, and not the
laboratory equipment supplied by it to the petitioner. The respondent
submits that the petitioner, being the recipient of the laboratory
furniture, should not enrich itself at the expense of the respondent.
The petition is meritorious.
It bears stressing that the respondent’s cause of action is one for sum of
money predicated on the alleged promise of the petitioner to pay for the
purchase price of the furniture, which, despite demands, the petitioner
failed to do. However, the respondent failed to prove that the petitioner
ever obliged itself to pay for the laboratory furniture supplied by it.
Hence, the respondent is not entitled to its claim against the petitioner.
There is no dispute that the respondent is not privy to the MOA executed
by the petitioner and FEMF; hence, it is not bound by the said agreement.
Contracts take effect only between the parties and their assigns. 30 A
contract cannot be binding upon and cannot be enforced against one who
is not a party to it, even if he is aware of such contract and has acted with
knowledge thereof.31 Likewise admitted by the parties, is the fact that
there was no written contract executed by the petitioner, the respondent
and FEMF relating to the fabrication and delivery of office and laboratory
furniture to the BIOTECH. Even the CA failed to specifically declare that
the petitioner and the respondent entered into a contract of sale over the
said laboratory furniture. The parties are in accord that the FEMF had
remitted to the respondent partial payments via checks drawn and issued
by the FEMF to the respondent, through Padolina, in the total amount of
₱2,288,573.74 out of the total cost of the project of ₱2,934,068.90 and
that the respondent received the said checks and issued receipts therefor
to the FEMF. There is also no controversy that the petitioner did not pay a
single centavo for the said furniture delivered by the respondent that the
petitioner had been using ever since.
We agree with the petitioner that, based on the records, an implied-in-
fact contract of sale was entered into between the respondent and FEMF.
A contract implied in fact is one implied from facts and circumstances
showing a mutual intention to contract. It arises where the intention of
the parties is not expressed, but an agreement in fact creating an
obligation. It is a contract, the existence and terms of which are
manifested by conduct and not by direct or explicit words between
parties but is to be deduced from conduct of the parties, language used, or
things done by them, or other pertinent circumstances attending the
transaction. To create contracts implied in fact, circumstances must
warrant inference that one expected compensation and the other to
pay.32 An implied-in-fact contract requires the parties’ intent to enter into
a contract; it is a true contract. 33 The conduct of the parties is to be
viewed as a reasonable man would view it, to determine the existence or
not of an implied-in-fact contract. 34 The totality of the acts/conducts of
the parties must be considered to determine their intention. An implied-
in-fact contract will not arise unless the meeting of minds is indicated by
some intelligent conduct, act or sign.35
In this case, the respondent was aware, from the time Padolina contacted
it for the fabrication and supply of the laboratory furniture until the go-
signal was given to it to fabricate and deliver the furniture to BIOTECH as
beneficiary, that the FEMF was to pay for the same. Indeed, Padolina
asked the respondent to prepare the draft of the contract to be received
by the FEMF prior to the execution of the parties (the respondent and
FEMF), but somehow, the respondent failed to prepare one. The
respondent knew that the petitioner was merely the donee-beneficiary of
the laboratory furniture and not the buyer; nor was it liable for the
payment of the purchase price thereof. From the inception, the FEMF paid
for the bills and statement of accounts of the respondent, for which the
latter unconditionally issued receipts to and under the name of the FEMF.
Indeed, witness Lirio testified:
Q: Now, did you know, Mr. Witness, if PHILAB Industries was
aware that it was the Marcos Foundation who would be paying
for this particular transaction for the completion of this
particular transaction?
A: I think they are fully aware.
Q: What is your basis for saying so?
A: First, I think they were appraised by Dr. Padolina. Secondly,
there were occasions during our inspection in Los Bañ os, at the
installation site, there were occasions, two or three occasions,
when we met with Mr. Navasero who is the President, I think,
or manager of PHILAB, and we appraised him that it was really
between the foundation and him to which includes (sic) the
construction company constructing the building. He is fully
aware that it is the foundation who (sic) engaged them and
issued the payments.36
The respondent, in its Letter dated March 26, 1986, informed the
petitioner and sought its assistance for the collection of the amount due
from the FEMF:
Dear Dr. Padolina:
May we request for your much-needed assistance in the
payment of the balance still due us on the laboratory furniture
we supplied and installed two years ago?
Business is still slow and we will appreciate having these funds
as soon as possible to keep up our operations.
We look forward to hearing from you regarding this matter.
Very truly yours,
PHILAB INDUSTRIES, INC.37
The respondent even wrote former President Aquino seeking her
assistance for the payment of the amount due, in which the respondent
admitted it tried to collect from her predecessor, namely, the former
President Ferdinand E. Marcos:
YOUR EXCELLENCY:
At the instance of the national government, subject laboratory
furnitures were supplied by our company to the National
Institute of Biotechnology & Applied Microbiology (BIOTECH),
University of the Philippines, Los Bañ os, Laguna, in 1984.
Out of the total contract price of PESOS: TWO MILLION NINE
HUNDRED THIRTY-NINE THOUSAND FIFTY-EIGHT & 90/100
(₱2,939,058.90), the previous administration had so far paid us
the sum of ₱2,236,119.52 thus leaving a balance of PESOS: ONE
MILLION FOUR HUNDRED TWELVE THOUSAND SEVEN
HUNDRED FORTY-EIGHT & 61/100 (₱1,412.748.61) inclusive
of interest of 24% per annum and 30% exchange rate
adjustment.
On several occasions, we have tried to collect this amount from
your predecessor, the latest of which was subject invoice
(01643) we submitted to DR. W. PADOLINA, deputy director of
BIOTECH. But this, notwithstanding, our claim has remained
unacted upon up to now. Copy of said invoice is hereto
attached for easy reference.
Now that your excellency is the head of our government, we
sincerely hope that payment of this obligation will soon be
made as this is one project the Republic of the Philippines has
use of and derives benefit from.38
Admittedly, the respondent sent to the petitioner its bills and statements
of accounts for the payments of the laboratory furniture it delivered to
the petitioner which the petitioner, through Padolina, transmitted to the
FEMF for its payment. However, the FEMF failed to pay the last statement
of account of the respondent because of the onset of the EDSA upheaval. It
was only when the respondent lost all hope of collecting its claim from
the government and/or the PCGG did it file the complaint against the
petitioner for the collection of the payment of its last delivery of
laboratory furniture.
We reject the ruling of the CA holding the petitioner liable for the claim of
the respondent based on the maxim that no one should enrich itself at the
expense of another.

Unjust enrichment claims do not lie simply because one party benefits
from the efforts or obligations of others, but instead it must be shown
that a party was unjustly enriched in the sense that the term unjustly
could mean illegally or unlawfully.39

Moreover, to substantiate a claim for unjust enrichment, the claimant

must unequivocally prove that another party knowingly received
something of value to which he was not entitled and that the state of
affairs are such that it would be unjust for the person to keep the
benefit.40 Unjust enrichment is a term used to depict result or effect of
failure to make remuneration of or for property or benefits received
under circumstances that give rise to legal or equitable obligation to
account for them; to be entitled to remuneration, one must confer benefit
by mistake, fraud, coercion, or request.41 Unjust enrichment is not itself a
theory of reconvey. Rather, it is a prerequisite for the enforcement of the
doctrine of restitution.42

Article 22 of the New Civil Code reads:

Every person who, through an act of performance by another,

or any other means, acquires or comes into possession of
something at the expense of the latter without just or legal
ground, shall return the same to him. (Boldface supplied)

In order that accion in rem verso may prosper, the essential elements
must be present: (1) that the defendant has been enriched, (2) that the
plaintiff has suffered a loss, (3) that the enrichment of the defendant is
without just or legal ground, and (4) that the plaintiff has no other action
based on contract, quasi-contract, crime or quasi-delict. 43

An accion in rem verso is considered merely an auxiliary action, available

only when there is no other remedy on contract, quasi-contract, crime,
and quasi-delict. If there is an obtainable action under any other
institution of positive law, that action must be resorted to, and the
principle of accion in rem verso will not lie.44

The essential requisites for the application of Article 22 of the New Civil
Code do not obtain in this case. The respondent had a remedy against the
FEMF via an action based on an implied-in-fact contract with the FEMF
for the payment of its claim. The petitioner legally acquired the
laboratory furniture under the MOA with FEMF; hence, it is entitled to
keep the laboratory furniture.

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The

assailed Decision of the Court of Appeals is REVERSED AND SET ASIDE.
The Decision of the Regional Trial Court, Makati City, Branch 150,
is REINSTATED. No costs.

SO ORDERED.

Puno, Austria-Martinez, Tinga, and Chico-Nazario*, JJ., concur.